Fintech Company Adyen Announces First Half Profit Soar by 79%

A Dutch fintech company Adyen NV, that is involved in processesing payments for online traders including Facebook and Netflix, posted a 79% jump in core profits, propelled by a higher volume of transactions handled for existing customers.

First-half core earnings (EBITDA) at Adyen reached 125.8 million euros ($139 million), that is 70.3 million more than a year before.

From the company they said they added some new customers during the half among which are famous brands as North Face and Timberland. They also added new payments options to the platform, including local deals with Apple Pay and Google Pay, Open Banking in Britain and M-Pesa in Kenya.

Adyen’s superiority compared to other such companies is that it is able to shuffle all kinds of payment buyers want to use, scattering them fast through its single platform with less errors than current competitors.

The company’s growth was pretty strong in all fields. Net revenue grew by 41% to 222.1 million euros and net profit went up by 92%.

CEO Pieter van der Does explained that the growth was “predominantly due to enterprise merchants already on our platform”.

“This growth came in the form of the organic growth of these merchants, as well as through winning additional volume with them in new geographies, channels, and product lines.”

Adyen handled 104.6 billion euros worth of payments in the first half, that represents 70 billion euros more than it was the case in the first half of 2018.

Shares, issued last year at 240 euros, were, at the time of writing, trading at 653 on Wednesday with a slight fall of 3.54%.

The company’s earnings per share (EPS) grew by 83% in the last year. This EPS growth is much more higher than the 19% increase in the share price. This rise could be showing that the market isn’t really eager about Adyen as it was before. However, that could be great buying opportunity considering the fact that, with a P/E ratio of 152.31, the market remains optimistic.

Simply Wall St’s analysis shows that the growth in earnings has been more than expected (they expected 49%) and that it will continue at an exponential rate, bringing the bottom line up to €389 million by 2022.

Founded in 2006, Adyen, meaning “new beginning” in Surinamese, works as a single payments platform globally, in order to accept payments and grow revenue online. It works as a one-size-fits-all transaction management system, supporting all credit and debit card payments, including Visa, Mastercard, American Express and above mentioned Apple Pay, Android Pay, and other mobile payment methods.

“Think about it, in the legacy [payment] world, where you had a gateway, and a processor, and a bank, information passes through all the different players, and all the different platforms, before it reaches Visa and Mastercard. When the information flows from multiple players, inevitably there is latency, there is an information loss, and all the things could go wrong.”

Hayashi claims that the problem is that approximately one in six transactions fail online and on mobile payment devices, and merchants have then difficulty in finding out the reason. That’s how he decided to create Ayden, guided by the thought of creating “the full-stack [payments services], and connect with Visa and Mastercard”.

Even though it’s invisible in the whole checkout process, Adyen works as a middleman for strong brands as are Microsoft, Booking.com, Uber, LinkedIn, Spotify, Evernote, Tiffany & Co, Gap and others. Hayashi noted that Adyen had also teamed up with China’s three largest payment providers – Tencent’s WeChat Pay, Alibaba’s Alipay and China UnionPay (UPI).